Dodgy dealings in the VIP terminal - The battle for Ukraine airports

A battle is raging for control of lucrative airports in Ukraine

By Graham Stack in KyivSeptember 5, 2018

It was nearly a catastrophe. A Bravo Airways flight arriving back from Anatolia and packed with Ukrainian holidaymakers careered off the runway in Kyiv in the midst of a torrential rainstorm and slid to standstill on the skirt of the runway, propped up on one wing. With 4 tonnes of fuel on board, it was a miracle nothing worse happened as the drenched passengers slid down emergency slides to safety. The plane was badly damaged but the 169 passengers were ok.

The investigation is continuing into the near tragedy at Kyiv‘s Sikorsky Airport – formerly known as Zhuliany - where the accident happened. Apart from the combination of heavy rain and squalls, aviation experts believe the blame is most likely to end up with the charter air company Bravo, which has a controversial reputation. Its predecessor, run by the same owners UMM, closed after it came under US sanctions for having too close links to Iran and was deemed to be by the US authorities of busting sanctions. Bravo was built on the ruins of UMM and is still operating today.

Bravo Airways flight 4406 overran the run way at the Sikorsky Airport, but no one was hurt

Things are not well with Ukraine’s aviation sector. Dodgy charter companies are the lesser problem for investors who are also looking into a chilling acid attack on a top manager at Ukraine’s largest airport, Kyiv Boryspol that shows that rule of law in Ukraine is still elusive

The investigation is continuing into the near tragedy at Kyiv‘s Sikorsky Airport but Denis Kostrzhevsky, chairman of the board at Sikorsky Airport, has a different culprit in his sights: Ukraine’s acclaimed National Anti-Corruption Bureau (NABU), probably the most successful new institution to emerge from Ukraine’s 2014 Euromaidan revolution -- a bright star in a dark sky.

Unfortunately for NABU, the near tragedy on June 14 coincided with an armed NABU search of Kostrzhevsky’s offices at the airport. Kostrzhevsky is co-owner of Master Avia, the private firm operating the state-owned airport since 2010 under the terms of an investment agreement.

This gave Kostrzhevsky plenty of ammunition to fire back at NABU. “The airport’s management, (…) hostage to the security forces, was not able to take measures that are appropriate to that weather condition.” As a result, “there was a threat to the lives and health of the passengers,” Master Avia said in a statement on July 24.

NABU however disputes that the raid could have had any impact on the airport’s safety operations: “We draw attention to the fact that the company’s statement was issued more than a month after the accident,” a NABU spokesperson said. The timing of Master Avia’s attack on NABU, NABU argues, shows that it is part of an anti-NABU campaign launched as its operations step on the toes of those in power.

NABU is locked in conflict with an institution originally intended as its ally, the special anti-corruption prosecutor, which instead is regarded as protector of government corruption and actively blocking NABU investigations. On July 17, anti-NABU protestors burst into NABU premises. Among the protestors were men reportedly linked to the interior ministry, one of NABU’s targets. A similar story surrounds the saga of the International Monetary Fund (IMF) sponsored anti-corruption court (ACC) laws that President Petro Poroshenko was actively blocking under the IMF made it perfectly clear Kyiv would not receive another penny from the fund until the court was set up. The ACC law was passed shortly before parliament’s summer recess began.

NABU was raiding the airport as a lot of money has gone missing. The ongoing probe of Kostrzhevsky’s Master Avia are based on the conclusions of the state audit chamber for the airport for 2017, which identified losses to the state of UAH 119mn ($4.7mn), according to investigation documents seen by bne IntelliNews.

The back-story to Master Avia is that the company in past was closely associated with a close crony of disgraced former president Viktor Yanukovych, Yury Ivanyuschenko, about whom bne IntelliNews wrote in 2013. In 2010, at the dawn of the disastrous Yanukovych era, and with the open backing of Ivanyuschenko, Master Avia won an investment tender to upgrade Kyiv’s second airport, which awarded the lease of the airport for 49 years. Master Avia was founded only two days before bidding for the tender, but won it unchallenged.

Blinded in Boryspil

While NABU’s activities at Sikorsky airport highlight the agency is making some, if not conclusive, progress in its anti-corruption battle, an unsolved act of violence at the presidential terminal of Kyiv’s Boryspol airport shows just how far there is left to travel in the war on graft.

In February 2017, an unknown assailant attacked the deputy CEO of the presidential “Hall of Official Delegations,” (or ZOD in Ukrainian) the presidential VIP terminal that handles all official visitors to Ukraine. The attacker threw acid in the eyes of mother-of-two Natalia Zhulinska directly outside the airport, blinding her.

The attack has been hushed up, but court documents allow its reconstruction.

The presidential administration had fired Zhulinska in 2014 to install a new management team at the airport to pursue restructuring. Zhulinska had fought back through the courts, using Ukraine’s strong protection for incumbent employees. She also organised a trade union cell at the state company to mobilise against a root and branch replacement of the work force.

As a result, a court decision reinstated Zhulinska in her job, and the presidential administration was forced to scrap plans for restructuring.

The main force behind the presidential administration’s new team at the “Hall” was controversial aviation businessman Roman Chelnokov. According to an OCCRP investigation, Chelnokov not only worked for Ukraine’s president, but also for allegedly corrupt President Teodor Obiang of Equatorial Guinea. There Chelnokov is a business associate of Vladimir Evdokimov, who served time in Ukraine for smuggling nuclear-capable missiles to Iran and China, and Vladimir Kokorev, who is on trial in Spain for money laundering for the Obiang family.

But Ukraine’s presidential administration denies that the attack on Zhulinska has anything to do with her professional conflict. “Zhulinska was involved in a love triangle and the attack was revenge for cheating,” press secretary for the property department of the presidential administration Yaryna Yakovyshyn told bne IntelliNews.

The local Boryspil police department investigating the attack have also investigated the personal motive theory, but have failed to establish the identity of the attacker, according to documents seen by bne IntelliNews.

“There was nothing personal about it [the attack],” says Veniamin Tymoshenko, head of Ukraine’s independent trade union of aviation workers, who says that prior to the acid attack there had been a number of smaller provocations against Zhulinska, as well as attempts at defamation.

A source close to Zhulinska called the press secretary’s allegations “ridiculous”. Zhulinska herself is undergoing operations and is unavailable and unwilling to talk to reporters when contacted for comment. Her treatment is being funded by the presidential terminal itself.

Zhulinska’s resistance to Chelnokov and backing from the workforce Chelnokov ultimately resulted in his being side-lined. “I have had no role in ZOD since April 2015 since Zhulinska organised a protest meeting as [President Petro] Poroshenko was flying out, and he gave an order to calm things down.” Chelnokov says he has nothing to do with the attack on Zhulinska and has not even been questioned by police about it. “I think they had some internal problems [leading to the attack]” he says.

A meter of the Ukrainian border

The Hall for Official Delegations is the official presidential airport terminal for all diplomatic delegations visiting Ukraine – thus Ukraine’s aviation gateway for the world’s heads of states. US vice president Joe Biden was received here at his last visit to Ukraine in January 2017, for example.

But it also has an important administrative and commercial role. The Hall has its own customs post and passport control, giving it influence over “1 metre of the Ukrainian border”, says Tymoshenko.

The VIP terminal at Boryspil airport, the Hall for Official Delegations, is still under construction

The Hall also has on its books an entire swish new VIP terminal that is awaiting completion – and for which in 2018 the government has awarded $15mn to finish The Hall will then become the main commercial VIP terminal at Ukraine’s main airport starting 2019 – a potential money earner.

Following Chelnokov’s exit and Zhulinska’s return, Zhulinska had set her sights on the post of CEO of the Hall. Under new reform legislation introduced in 2015, the CEO would no longer be a presidential appointee, but would be decided by a competitive procedure administered by an independent appointments board.

Zhulinska’s blinding in February 2017 effectively ensured that the president’s candidate got the nod in June 2017: a youngster connected to a controversial Kyiv construction baron. There is nothing to suggest that either of these is in any way connected to the attack on her. But neither is there confidence in the local Boryspil police department’s ability to identify the culprits.

Former US vice president Joe Biden in his moving memoirs “Promise Me Dad” recalls flying into land at Boryspil in December 2015, when he gave what he describes as a historic speech to the Rada. On the approach to Boryspil, Biden mulled how to best rouse Ukraine’s elite to the need to create a “glorious new beginning for their country,” recognising that “time was running out on the Ukrainian government to get it right.”

Nearly three years after Biden’s speech, a start has been made on Ukraine’s “glorious new beginning” but the battle over Kyiv’s airports and the Zhulinska case shows that Ukraine’s government still has not got it right.

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